August 16, 2023 10:01 GMT
MNI CBR Review: Sell-Side Views (2/2)
- Goldman Sachs say the CBR’s decision is possibly a reaction to political pressure after a presidential economic adviser blamed loose monetary policy for the depreciation of the RUB and argued that a strong RUB is in Russia's interest.
- In Goldman Sachs’ view, the RUB will continue to weaken unless oil prices rise. Furthermore, the transmission of rates to the RUB is likely to be slow since the financial channel is weaker than it used to be and the main transmission of interest rates to the currency would instead be through lower domestic demand and weaker imports, which will take time.
- They say whether the rate hike will suffice remains primarily a function of fiscal policy and oil prices. Overall, Goldman Sachs think it seems more likely that higher oil prices could support the RUB in the short run.
- Commerzbank say the RUB’s problems are not down to domestic interest rates since the old rate was sufficient to fight inflation. They say that the rate hike is a sign that the CBR has to react to political pressure from the Kremlin and that it seems likely that CBR policy will increasingly deviate from its former path of reason.